Two controversial housing policies from the former BC Liberal government have found their home in the NDP’s September budget update.
This includes the BC Liberals’ Home Owner Mortgage and Equity Partnership program, which in January started offering up to $37,500 in five-year, interest-free loans for first-time homebuyers seeking financial assistance.
Touted as a $700-million program to help 42,000 British Columbians afford homes, the program will see 76% of its funding cut over the next three years due to “significantly lower” demand projections: 2,600 applications had been fielded at the end of June, with 800 individuals having purchased a home, and another 800 approved for one. The new government now expects to offer loans to 9,000 individuals.
Also in the budget is revenue from the 15% property transfer tax applied to foreign buyers in Metro Vancouver. While the policy is currently under review, without a policy change, the foreign buyers’ tax is expected to generate $200 million in annual revenue over the next three years.
“This is a first step, we want to take the time to make sure that we put in place the comprehensive strategy. We don’t want to piecemeal the approach. We saw with the foreign buyers’ tax that there have been challenges,” said Finance Minister Carole James during her first budget briefing on September 11.
That comprehensive strategy, which aims to create 114,000 affordable housing units over the next decade, starts with $674 million in capital and operating spending over four years to build and operate 2,700 housing units, representing 3.2% of the 114,000-unit goal.
Within that, the NDP has earmarked $291 million over the next two years to build 2,000 modular units of housing for the homeless. An additional $172 million over three years is allocated to operating expenses, which include around-the-clock staffing and support services.
The government has also committed $208 million over a four-year period to construct 1,700 units for low-to-moderate income renters, seniors and adults with development disabilities or mental health challenges. The units will be run by not-for-profit societies, though $3 million in government operating costs is expected.
“The steps in this budget are significant steps. They’re first steps, but they’re significant steps,” said James.
In 2016 and leading up to the February budget, the BC Liberals committed $920 million to various housing initiatives. Compared to the previous government’s three-year fiscal plan tabled earlier this year, the NDP expects to spend an additional $175 million on new housing initiatives, starting with $14 million this fiscal year, plus an additional $75 million and $86 million in 2018/19 and 2019/20, respectively.
Eyeing the markets
Along with highlighting rising interest rates as a risk to housing affordability and the government’s fiscal plan, the NDP’s budget update shows that a significant slowdown in B.C. housing starts still has yet to materialize.
Along with employment, retail sales and exports, the update noted that 2017 housing starts have “exceeded expectations”. An anticipated 28.4% decline has been pushed back in part to next year, with starts this year anticipated to decrease by 8.5%, followed by a 20.8% drop in 2018.
Property transfer tax revenue is expected to decline 7.5% this fiscal year, and by an average of 6.5% over the next two years. Property tax revenue is expected to grow by an average of 4.8% annually over the next three years.
Missing from the NDP’s comprehensive housing strategy is the party-promised renter’s rebate: a $400 subsidy that would assist individuals with their rent, provided they meet certain requirements.
The government has also previously said it is reviewing potential changes to the amount by which landlords can increase rent on an annual basis.